From the Chairman
By David A. Vaudt, GASB Chairman

The Financial Reporting Model and Related Efforts: The Path Ahead


In 2018, the GASB is working on three related efforts that will help reshape state and local governmental accounting and financial reporting:
  • The financial reporting model reexamination
  • Revenue and expense recognition, and
  • Research reexamining most existing note disclosures.
These endeavors could have a significant impact on what state and local governments’ financial statements look like going forward, how revenue and expense is recognized within those statements, and what items are disclosed to enable financial statement users to better understand them.
These endeavors could have a significant impact on what state and local governments’ financial statements look like going forward.

This article provides a brief update on each effort and encourages you to share your perspective with the Board.

Financial Reporting Model


Following the issuance of the Invitation to Comment (ITC) in the Financial Reporting Model project in late 2016 and the redeliberations that followed, we’ll continue to work on separate but related tracks toward the issuance of two documents toward the end of 2018: 
  • A Preliminary Views that presents the Board’s early thinking on what a proposed standard would look like, and
  • A companion Preliminary Views on recognition concepts that would guide the Board’s future standards setting.

Revenue and Expense Recognition


At the same time that the direction of the reporting model is being mapped out, the Board also is beginning to evaluate how revenue and expense would be recognized within that model in the Revenue and Expense Recognition project.

In January 2018, the Board issued an ITC, Revenue and Expense Recognition, that discusses two potential recognition models: an exchange/nonexchange model, and a performance obligation/no performance obligation model. ITCs are issued to obtain stakeholder feedback before the Board begins to develop new or revised standards.

The first model includes a classification process based on the existing definition for exchange transactions. If this model were pursued further, a standardized recognition approach for exchange transactions would be developed and the existing guidance for nonexchange transactions would be improved to address certain application issues.
If you haven’t had a chance to let us know what you think. there is still plenty of time ahead of the April 27th deadline.

The second model features a classification process based on a tentative definition of a performance obligation. If this model were pursued further, new standards would be developed for recognizing revenues and expenses from transactions as performance obligations are met. Existing guidance for nonexchange transactions would be improved and applied to transactions without a performance obligation.

Many thanks to those of you who already have shared your thinking on the ITC with us. If you haven’t had a chance to let us know what you think. there is still plenty of time ahead of the April 27th deadline. More information is available in the opening pages of the document. The Board knows how valuable your time is and is very grateful for your input.

Pre-Agenda Research on Note Disclosures


The GASB staff is winding up its research activities on existing note disclosures with stakeholder interviews. The final research report should be completed in the middle of the year. The research results will give the Board the information it needs to consider whether additional or revised guidance on notes to financial statements is needed and, if so, what topics would be addressed.

Your ideas and feedback are a critical part of the equation and we ask you
to continue to share your thoughts with us throughout this process.